A pensions expert is warning 12.5 million older people across the UK to prepare for a financial blow this week when Chancellor Jeremy Hunt delivers the Autumn Statement. Ray Black, managing director of chartered financial planning firm, Money Minder, suggests there may be “continued restrictions on State Pension uprating”, higher taxes and more controversially, an increase to National Insurance contributions from April announced on November 17.
The Triple Lock rule is the UK Government’s guarantee that State Pensions grow in line with whichever is highest out of earnings, inflation or 2.5%. Earlier this week, Work and Pensions Secretary, Mel Stride said that pensioners will be kept to the “forefront” as difficult spending decisions are taken by the UK Government.
His comments come as Prime Minister Rishi Sunak considers raising State Pensions and benefits in line with inflation in a move that would likely usher in deeper public spending cuts elsewhere and higher tax rises. Treasury sources insisted no decisions have been taken, but did not deny a report in the Times stating they would avoid real-terms cuts on pensions and benefits.
Speaking on Times Radio Mr Stride assured pensioners that the UK Government would seek to protect them through the months ahead.
He said: “Pensioners are absolutely at the forefront of the group that we want to really protect as much as we can through these difficult times.”
But he re-iterated that there are “tough choices” coming for the Chancellor.
A current poll on the Daily Record Money Saving Scotland Facebook group does not show confidence in the Triple Lock guarantee being honoured with 86% of respondents not expecting to see State Pension or benefits uprated by the 10% September inflation figure.
Raising State Pensions and benefits with soaring inflation could cost a combined £11 billion next year but would prevent a rebellion from some Tory MPs and avert at least some criticism of the challenging decisions being unfair.
Ray Black, managing director of chartered financial planning firm, Money Minder, said: “It is highly likely that our new PM will use the Autumn Statement to steady the ship in an attempt to repair the recent adverse press that the government has been attracting in how they manage the economy going forward. Therefore, we might see some continued restrictions on State Pension increases in April, higher taxes and more controversially, higher National Insurance contributions.
“Pensioners are, like much of the population, quite worried about the rising energy and food costs in the coming months. Even with the government’s announcements of financial support, it could make it a very tough winter for many, especially for those who are already struggling to make ends meet.”
He continued: “Hopefully, on 17 November, we will find out if the new PM Rishi Sunak plans to follow through with the previous PM’s promise to reinstate the pensions ‘triple lock’. Potentially, this could increase the newer flat rate pension to over £200 per week.
“However, it’s very possible that won’t happen now as the PM and the Chancellor concentrate on reducing borrowing costs and repairing the government’s balance sheets.”
Mr Black believes the April Budget is likely to be the one where “we will see bigger and potentially more positive changes”.
He explained: “Sunak and his government will be doing their best to get everybody on side in preparation for a general election by January 2025, at the latest.
“This leaves the government very little time to impress the voting public from all walks of life. They will need to work hard to try and put some money back into people’s pockets sustainably while also encouraging growth in the economy if they hope to get another term of government.
“While January 2025 seems a long way off, they’ll need to start working on this goal as soon as possible. Keeping the Triple Lock in place may help the government with this, ending it could be a disappointment for more than just the UK’s pensioners."
State Pension rates for 2023/24 under Triple Lock
If the UK Government uprates benefits by inflation, 10% is the percentage they will be increased by and this will come into effect from next April.
This would see New State Pension payments go up from £185.15 per week to £203.85 and Basic State Pension weekly payments rise from £141.85 per week to £156.20.
If wages data (5.5%) is used, the New State Pension would rise to £195.35 per week and Basic State Pension to £149.65.
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